Poised to become a mid-tier gold producer

In Tanzania, exploration programs are being conducted in two separate geological terrains, namely the Archean (2.7-3.3 billion year old “Ga”), greenstone-hosted, Lake Victoria Goldfields (north-west) and the Proterozoic (2.2-1.6 Ga) Lupa Goldfields (south-west). Great Basin Gold also manages an 80% earn-in joint venture with African Barrick on 42 prospecting licences in the Geita Belt of the Lake Victoria Goldfields.

The GBG Rusaf acquisition agreement entered into in 2008 provided for additional Great Basin Gold shares to be issued in the first three years from closing, contingent upon gold discoveries above a threshold of 500,000 ounces in size being made on certain mineral prospects held. In the event of such discoveries, the Company would issue shares valued at the higher of closing price on date of acquisition ($3.30) or then-prevailing market price to the former owners on the basis of valuing these gold ounces at US$15/oz for inferred resources and US$40/oz for measured and indicated resources (subject to a minimum average cut-off grade of 1.5 grams per tonne or 0.04 oz per ton).

Great Basin Gold also agreed to spend a minimum of $15 million and up to a maximum of $27 million in terms of the agreement to explore the acquired properties during the first three years from closing of the transaction on April 1, 2008. The increased expenditure would also be contingent upon gold discoveries above a threshold of 500,000 ounces in size being made on certain mineral prospects.

In connection with this contingent payment requirement, the Company issued 3,073,773 shares in January 2010 with a total value of $5.5 million. During May 2010, the terms of the remaining liability were amended and settled in full through the issuance of 7.5 million shares in June 2010, thus eliminating any further discovery-contingent common share issuance requirements as well as eliminating the mandatory exploration expenditure timetable. Great Basin Gold now holds all the prospects outright without further obligations in terms of the acquisition agreement.

There remains a considerable amount of preliminary exploration work still to be completed on these properties. A number of permits are held that extend over significant strike extents of prospective structures, and which still require systematic exploration and potentially follow-up drilling. This process could ultimately allow a sizeable reduction of area of permits held.

An initial target prioritization exercise has been completed, and this work continues to be supported with desk-top structural studies of airborne magnetic data and integration of gravity, geochemical and drilling data. The Imweru prospect (Geita West) remains a key follow-up target, with extensive drilling required to fully evaluate the nine kilometer long shear corridor. Subject to orientation studies, Mobile Metals and Iron (“MMI”) geochemical surveys are planned on a number of covered structural targets. The Lupa Goldfield has also provided a number of follow-up targets, and work is progressing to seek a balanced prioritization with drilling and trenching programs to augment infill geochemical surveys.